updated 07/19/02
Cornell University Policy Library -- Policy 3.7

ACCOUNTING SYSTEM

INTERIM POLICY

Volume 3, Financial Management 
Chapter 7, Accounting
Responsible Executive: Vice President for Financial Affairs and University Controller
Responsible Office: University Accounting
Issued: February 1996
Revised: May 2001
Errors or changes? Email us.

APPENDIX, continued

Indirect Cost Calculation Components

There are seven categories of indirect costs, or recoverable university expenses:

I. Depreciation gives recognition to the cost of acquiring long-lived assets.

A. Building Depreciation is calculated based on the useful life of the structure. Federal funds that paid for any part of the facility are excluded from the depreciation calculation. Depreciation is allocated to all other functions of the university based on the functional square footage of the building. The reports on square footage are provided by the Space Inventory Department.

B. Movable Equipment Depreciation is calculated at various rates reflecting the useful lives of the equipment, excluding equipment purchased with federal funds but including donated equipment. The equipment totals are summarized on a departmental basis by the Capital Assets section of the Office of the Vice President for Financial Affairs. Depreciation is allocated to all other functions of the university based on the functional square footage of each department as reported in the physical space inventory system (PSIS).

C. Fixed Building Equipment Depreciation includes items like lab benches, water fountains, etc. that are merely attached or fastened to the building but not permanently fixed. Depreciation is calculated at an annual rate of 6 2/3%, 15 year life, and allocated to the major functions of the university based on the functional square footage of the building.

 II. Plant and Operations Maintenance are maintenance, custodial, utility, and other facilities-related costs. For the Endowed Division, these costs are calculated building by building. For the Contract Colleges, utility expenses accumulate based on aggregate usage and allocates building by building. Based on the physical space inventory system, Plant Operation and Maintenance costs for each building are allocated to functions. In certain major research buildings, a special study has been done to determine the proportion of utilities used in research areas as opposed to non-research areas. In these buildings, a utility weighting factor was developed to more accurately reflect the utility costs associated with research.

III. General and Administrative are expenditures for central activities concerned with management, administration, and long-range planning for the entire institution. These costs are distributed to both the Endowed Division and Contract Colleges, including enterprise and service operations; and the Medical College. General and Administrative costs are then allocated to the major functions in each division based on the modified total direct costs (MTDC) of these functions.

IV. Student Services are divided between Endowed Division and Contract Colleges of the university. Each division in turn allocates a portion to research based on the ratio of Graduate Research Assistants (GRA's) to total students on an FTE basis.

V. Sponsored Programs Administration are expenses specifically associated with the administration of sponsored accounts, from Sponsored Funds Accounting, Office of Sponsored Programs, and a portion of the Vice President for Research Office. These expenses are split between the Endowed Division and Contract Colleges of the university, based on direct expenditures for organized research and other sponsored activities.

VI. Department Administration (DA) includes all expenses incurred for administrative and supporting services that benefit multiple functions within specific academic departments or within academic dean's offices, (college administration). There are five (5) components of cost included in Departmental Administration:

- general support salaries and wages

- administrative salaries and wages

- faculty/professional salaries and wages

- employee benefits

- other general expenses

 A specific formula or ratio is used to extract the DA expenses out of the non-sponsored accounts for each academic department. After all DA expenses are identified, they are allocated to the department's major functions based on the modified total direct costs (MTDC) of these functions.

Caution: Effective October 1991, federal regulations have capped the amount of reimbursement for administrative indirect costs at 26% of MTDC. This cap, which originally included General and Administrative, Departmental Administration (including College Administration and sponsored programs administration) was expanded in 1994 to include Student Services costs and all other costs not specifically identified as Facilities costs.

VII. Library are expenses allocated to specific libraries through the accounting system. These expenses are allocated using an analysis prepared by the central library staff. Certain costs (such as rare books) are excluded per OMB Circular A-21. Certain income, such as borrower's card fees and fines, are applied against the direct library expenses to obtain the total allowable library expenses. Total allocable library expenses are then divided into two categories:

- acquisitions: expenses related to the purchase, preparation for distribution, and maintenance of library materials;

- user services: expenses related to circulation, reference, and reserve activities. These expenses are allocated to primary functions based on a special cost analysis study.

Debit Object Codes Excluded from MTDC Base (Modified Total Direct Cost)

405X

Faculty, Sabbatic Leaves

427X*

Graduate Research Assistant, Tuition and Fees

498X*

Lump Sum Stipends

501X*

Capital Acquisitions, Buildings

502X*

Capital Acquisitions, Equipment

503X*

Capital Acquisitions, Furniture

504X*

Capital Acquisitions, Land

505X*

Capital Acquisitions, Lease Purchase Payments, CIT

506X*

Capital Acquisitions, Improvements Other than Buildings

507X*

Capital Acquisitions, Vehicles

508X*

Capital Acquisitions, Works of Art

509X*

Capital Acquisitions, Computer Software

51XX*

Capital Acquisitions, Computer Equipment

55XX*

Capital Construction

632X*

Leases and Rentals, Real Property

658X

Services, Computer Miscellaneous

697X*

Subcontracts over $25,000

81XX*

Student Aid

82XX*

Student Aid

845X*

Prizes

860X*

Student Aid

94XX

Cost of Sales, Cornell Store

950X

Accessory Instruction

957X

Cost of Sales

983X

Equipment Sales Recovery

*NOTE - These object codes are excluded from MTDC base in accordance with OMB Circular A-21. All others are excluded from MTDC base by university procedure.

Instructions for Using the Transfer Code Chart

The need to move money from one fund to another is very common in fund accounting. There are specific rules and reporting requirements for transfers between fund groups. The transfer code chart is based on the fund group attribute and incorporates the various rules and reporting requirements using specific transfer object codes.

Caution: Transfer transactions initiated by a department may only be recorded using a journal voucher.

The numbers displayed in the headings of the chart are fund groups. (An "X" in the number indicates any fund group in the range would follow the rules associated with that group.)

The object codes in the body of the chart are arranged so the first number is used with the account from which the money is being transferred (the debit). The second number is used with the account to which the money is being transferred (the credit).

Transfers involving Funds Functioning as Endowment have two combinations of debit and credit object codes. The first combination is used when investment income is returned to or withdrawn from principal. The second set is used for any other transfer to or from Funds Functioning as Endowment.

Any box labeled "N/A" means the transfer between the two funds groups is not allowed.

To use the chart:

1. Identify the fund groups of the accounts involved in the transaction.

2. In the far left column of the chart, locate the fund group for the account from which the funds are being transferred (i.e., the "from" account).

3. Follow the row for the "from" account across the chart to the fund group of the account to which the funds are being transferred (i.e., the "to" account).

4. Use the object codes found in the box where the row and column meet to prepare your journal entry.

Transfer Code Chart

New Transfer Code Charts for use beginning of FY03

The above Transfer Code Chart is for use beginning in FY03. Although the new grid will be mandatory as of the beginning of FY04, we
encourage you to utilize this more user-friendly system beginning with FY03 transactions.

If you have questions or comments, please contact uco-unrfds@cornell.edu.


Monthly Calendar Processing Schedule, Sample

If you would like a copy of this sample, please send a request with the following information: To send a request, click here.


 

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